Hospital prepares for health care reform

Change on the way for CPH

While news about the Supreme Court upholding key pieces of President Barack Obama’s heath care overhaul has dominated national headlines recently, Central Peninsula Hospital officials have been busy preparing their facility and staff to comply with the historic law for some time.


CPH Chief Executive Officer Rick Davis said the hospital’s efforts to prepare for the law that requires almost all Americans to be insured by 2014 and creates fundamental changes in the nation’s health care system can be seen in everyday work in at least four distinct areas.

The hospital will continue to improve quality and patient satisfaction measures, ready for and install electronic records systems, incorporate integrated care systems and prepare for shifts in the way CPH is paid for care, Davis said.

“We still have a lot of work to do,” he said. “We are just getting started. I’d say we’ve got a good start, but we’ve still got a long ways to go.”

Davis said health care reform seeks, in part, to lower the already high costs associated with the industry.

“Health care costs are way too high and that’s what’s driving all of this and I’ll be the first to admit that,” he said. “Across the country we spend way, way too much on health care.”


Value-based purchasing

Davis said the Patient Protection and Affordable Care Act will spur a value-based purchasing system. That concept will shift the hospital’s financial incentives away from a quantity-based system where more tests and procedures performed mean more profit for the hospital.

Rather, the hospital’s financial incentives will be based on health outcomes, quality measures and patient satisfaction surveys.

So far, the federal government has begun holding out 1 percent of Medicare payments due to the hospital. The hospital then earns that money back based on how it performs in certain weighted areas — 70 percent based on core measure compliance and 30 percent paid on patient satisfaction.

“But if you do better than other hospitals in those quality measures, you can earn more than your 1 percent back,” he said.

Right now that means about $150,000 a year to CPH, but the rate goes up a half a percent each year for the next four years, Davis said.

“We probably spend several times that to meet those goals, but we do it because it is the right thing for the patient,” he said. “We don’t do it for the money.”

Davis said that idea is where health care should be headed, but he feels a higher percentage held out of Medicare would spur more hospitals to fall in line with the initiative.

“It is really a good idea because it really does force us to start focusing on quality outcomes and patient satisfaction,” he said. “I would like to see them increase the amount they hold out. Make it meaningful and hold out 15 percent of our Medicare payment. That would really incentivize people to move in that direction.”

CPH is already the top hospital in the state in both of those areas — quality measures and patient satisfaction scores ranked by the Hospital Consumer Assessment of Healthcare Providers and Systems.

Davis said the expectation in the health care industry is that insurance companies will begin to move in the same direction as the system becomes better understood and more prevalent among hospitals.

“I think the insurance companies are going to be proposing contracts based on that payment methodology because it gives their members better health care and it is going to save them money,” he said.


Electronic health records

Davis said the hospital is also working to employ meaningful use of electronic records as part of health care reform that encourages hospitals and doctors both to develop systems that speak to each other.

“Its intent is to drive the whole industry to a more integrated system of care, where the physician and the hospital can look at your health record online immediately and know what is going on at any point in time,” he said.

Right now, what happens to a patient at a doctor’s office one day isn’t available to the hospital the next day in case of an emergency. Ideally, all of a patient’s lab results, X-rays and other information will be available to all providers involved in a patient’s care, Davis said.

In mid-July CPH went live with a computerized physician order entry program that allows physicians to write their orders and do documentation electronically from the floor. The program, Davis said, takes a lot of paper out of the process and leaves less room for error.

The Kenai Peninsula Borough recently introduced an ordinance to allow the hospital to pull $666,646 from their plant replacement and expansion fund for a new electronic health records system for its emergency department, Davis said.

Once those two systems are online, the hospital will work to add more modules, such as nursing documentation, to the records so more systems are talking to each other, Davis said.

“We won’t be fully integrated within the hospital probably for two years,” he said.

Also, Davis said independent physicians are being nudged to develop their own electronic systems in their offices to integrate with the hospital. He said most physicians are doing so already, but it could be three or four years before those systems and the hospital’s systems are integrated.

“That’s our next challenge is integrating our system with each individual physician’s office because there are quite a few different electronic health records that a private physician can put in their office, so we have to build an interface for each one of those different systems,” he said.


Bundled payments

Soon the Center for Medicare and Medicaid Services will start to link payments for multiple services a patient receives during an episode of care, Davis said.

For example, if a patient receives a hip replacement, he said the entire team that worked to replace the hip from start to finish gets one payment.

“Whereas if you come in now, you get a bill from the surgeon, you get a bill from the anesthesiologist, you get a bill from the pathologist, you get a bill from the hospital — everybody who has to do with that care sends you a bill to get paid for their services,” he said. “Under bundled payment, which is a big part of the Affordable Care Act, they will make one payment for that hip replacement and then the hospital is going to have to figure out how that gets divvied up.”

The bundled payments portion of the act is probably the most “threatening” piece of the act to physicians in the community, Davis said. If there is not a partnership and a framework in place to structure the bundled payment mechanism, it makes it difficult for all parties.

In that aspect, bundled payments will force physicians to work more closely with hospitals.

“I think that’s why you are seeing a lot of the tension right now is because of the bundled payments,” he said.

Locally, CPH will have to work with all of the area’s independent physicians to figure out a framework to allow the two to partner and respond when the bundled payment program is implemented. 

There are several ways a hospital can get ahead of the curve in that respect, Davis said. Hospitals can integrate, employ physicians and form partnerships through structures like a physician hospital organization. That is reason CPH has started to employ more physicians and surgeons, he said.

Davis said he thinks at least 95 percent of new physicians are looking to be employed by hospital — almost none are looking to establish a private practice.

“In the end, the private practice model doesn’t work very well under this new structure,” he said.

Davis said CPH is still exploring its options to find what might work best with the local medical community. In that regard, however, CPH isn’t any different than many other hospitals, Davis said.

“Some hospitals are further down that path than others,” he said. “By Alaska standards we are in probably in pretty good shape. But in the Lower 48, we would be behind the curve.”

A side effect of the bundled payment structure, Davis said, will be forced clinical integration. That will likely help improve patient satisfaction and quality scores which can, in turn, be better tracked electronically.

“If we don’t have the electronic record, we may not collect all of the data completely about what goes on even when they are in the hospital,” Davis said. “By having everything electronic we have a better way to track and manage the quality and patient satisfaction piece, too.”


Brian Smith can be reached at